Amazon, Berkshire Hathaway, JPMorgan to create a new healthcare giant

01/31/2018

Online retailer Amazon, Warren Buffett’s Holding Berkshire Hathaway and JPMorgan Bank will join together to create a new company in the healthcare sector. The parties made their public decision in a joint statement. The goal is to reduce spending on health care and improve the service for employees in the United States.

Kārlis Dambrāns via flickr

The new company will not be aimed at making a profit and is burdened by the related restrictions, the partners report. The company will focus on technology solutions that will provide "a simple, high-quality and transparent health care system at an adequate price."

The partnership announced today unites three of the most influential companies in the US, says The New York Times: Amazon is the world's largest online retailer, Berkshire Hathaway is the holding company of billionaire investor Warren Buffett, JPMorgan Chase is the largest bank in the US in terms of assets. All three companies are among the largest private employers in the US, together they employ 1.2 million people, recalls Bloomberg.

The growing cost of health care services undermines the US economy, says Warren Buffett, Chairman of the Board of Directors of Berkshire Hathaway. "It will not be easy, but reducing the burden on the economy from the health care system, while improving the conditions for employees and their families, is worth it," says Amazon founder Jeff Bezos. In recent years, the cost of health care in the US has risen sharply, which has led to an increase in the cost of health insurance for working Americans, writes the Financial Times.

The partners promised to tall more about key details about the new company later.

Despite the lack of information, US quotes of companies in the health sector collapsed before the opening of trading in the. According to Bloomberg, Express Scripts Holding and CVS Health, which act as intermediaries between payers and all other participants in the US health system, fell by 6.7% and 5.5% respectively. The papers of insurers Cigna and Anthem declined, too.

The companies announced a new business after the market for a long time discussed the company’s possible exit into the business of prescription drugs, recalls Reuters. For example, Bloomberg wrote in November 2017: "The pharmaceutical market is one of the biggest potential targets for Amazon." After the online giant has purchased Whole Foods Market supermarket chain, it can aim at selling drugs, the agency argued: pharmacy buyers often take related products, such as cosmetics and household chemicals, and there are a lot of intermediaries in pharmaceutical distribution, whose extra charge Amazon might want remove.